Bottoms up: Timing the housing market

    So when will we reach the bottom of the housing market and, therefore, the absolute best time to buy?  The honest answer is, "Who knows?"  All the variables, like unemployment figures, foreclosure rates, the financial markets, a new President, such esoteric financial instruments as credit default swaps, and events we don't even yet know about conspire to make predictions impossible.  But that doesn't keep some economy and housing pundits from speculating.
    "More affordable prices, pent-up demand, incentives on new homes, fewer housing starts and expected declines in interest rates for fixed-rate mortgages also should help ease the crisis [by mid 2009], said David Seiders, chief economist of the [National Builders Association]," according to the Wall Street Journal.
    "The converted bears, as well as the panicked sellers desperate to bail out and nervous buyers afraid to jump in, will be dead wrong nine months from now, when housing prices bottom.  In fact, I'll call the precise date of the housing-market turnaround.  It will begin on June 30, 2009," wrote the hyperkinetic Jim Cramer in New York magazine in September.
    Economists and financial program hosts are like meteorologists who tell you the sun is going to shine one day and then spend the next day explaining why they were wrong.  (The fault was not theirs but rather some occlusion that no one even as brilliant as they could possibly foresee.)
    The fact is they don't know, you don't know and I don't know when prices will begin to stabilize.  The only thing for sure is that someday they will. Here are a few hints if you have your eyes on a particular market:

• Regularly check unemployment figures there; most likely they have increased in recent months, but as soon as they start to stabilize, housing prices will follow.
• Check housing inventory numbers; as the median time it takes to sell homes in a market drops, look for home prices to begin to rise. If you are working with an agent, have them get you the data for individual neighborhoods or golf communities in which you might be interested.
• Many vacation and retirement home markets do not have major foreclosure issues, but some of the larger communities may have a few homes in default. Keep an eye on them, as foreclosures will drag down prices in the immediate area until they are flushed out of the system.
• Do not rely on average or median prices in an entire market; a market is composed of zip codes, and zip codes composed of neighborhoods, and it is the prices within a neighborhood that you want to compare, even down to the street level.
• Do not go it alone in scouting out properties. Engage a "buyer's representative," someone who will represent you in your pursuit of a home. There are different types of these agreements, but the most popular is the "exclusive representation" agreement, which obligates you to pay the agent a commission if he/she finds you a house. Keep in mind that, in many cases, their commission will be paid by the seller; but even if it is not, your agent's negotiating skills could save you enough on the purchase price, especially in this market, to more than pay for their services.
• Finally, understand that if you wander into a golf community or an open house somewhere and show interest in a property, the agent you speak with will likely be working for the seller. The agent cannot possibly secure the lowest possible price for you and the highest possible price for the seller. Your interests may be secondary. That is another good reason to identify an agent to represent your interests solely.

If you have any questions about particular markets, communities or working with real estate agents, please do not hesitate to contact me.